Consider the indifference curve map and budget constraint for two goods, X and Y. Suppose the good on the horizontal axis, X, is normal. When the price of X increases, the substitution effect
a. and income effect both cause an increase in the consumption of X.
b. causes a decrease in the consumption of X, and the income effect causes an increase in the consumption of X. However, the substitution effect is greater than the income effect.
c. causes an increase in the consumption of X, and the income effect causes a decrease in the consumption of X. However, the substitution effect is greater than the income effect.
d. and income effect both cause a decrease in the consumption of X.
d
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A $100 bill is a
A) commodity money. B) fiat money. C) representative commodity money. D) partially representative commodity money.
When less than the efficient amount of a good is produced, how does the marginal benefit of the last unit produced compare to its marginal cost?
What will be an ideal response?